Q1 2021 Lifetime Brands Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to lifetime brands first quarter 2021 earnings Conference call.
At this time I would like to inform all participants that the airlines will be in listen only mode.
After the Speakers' remarks, there will be a question and answer period if.
If you would like to ask a question. During this time. Please press star one on your telephone keypad.
I'd now like to introduce your host for today's conference Andrew Squire. Mr. Squire you may begin.
Thank you good morning, and thank you for joining lifetime brands first quarter 2021 earnings call.
As of today for management of Rob <unk>, Chief Executive Officer, Larry <unk>, Chief Financial Officer.
Before we begin the call I'd like to remind you that our remarks. This morning may contain forward looking statements that relate to the future performance of the company and these statements are intended to qualify for the safe Harbor liability established by the private Securities Litigation Reform Act.
Any such statements are not guarantees of future performance from factors that could influence. Our results are highlighted in today's press release and others are contained in our filings with the Securities and Exchange Commission.
Our remarks this morning and in today's press release also contain non-GAAP financial measures within the meaning of regulation G promulgated by the Securities and Exchange Commission.
Included in such release for the reconciliation of these non-GAAP financial measure of the comparable financial measures calculated in accordance with GAAP.
With that introduction I'd like to turn the call over to Rob debt.
Please go ahead Rob.
Thank you.
Good morning, everyone and thank you for joining us today.
To discuss lifetime brands first quarter of 2021 financial results.
Lifetime brands is off to an excellent start in 2021.
With top line growth of approximately 35%.
Driving net income of $3 1 million and year over year growth in adjusted EBITDA of 418% or $13 $6 million.
Our strong results this quarter demonstrate lifetimes of ability to consistently outperform across our categories and the many channels in which we sell our products.
I could not be more proud of the lifetime team.
And the incredible work that has contributed to our unprecedented results.
Which once again validates the strong foundation, we have established two of our lifetime to point out strategy.
And while these true delivered strong top line growth.
We also remain focused on disciplined cost control.
Which has contributed to making our company a leaner organization.
And continues to build on the 21% adjusted EBITDA growth we achieved in 2020.
I'll.
Start with our core U S business, which showed remarkable strength and continues to lead our overall business.
In fact that has now delivered its seventh consecutive quarter of year over year growth.
We are benefiting from our ability to add new products.
Grow into adjacent categories and expand brands, such as our Kitchenaid line, which we recently extended into cutlery and into international markets.
The combination of our strong topline growth.
The benefits of better utilization of our infrastructure.
And the disciplined focus on cost efficiencies all contributed to our strong results for the quarter.
Building on our momentum from 2020.
We continued to gain market share across the majority of our categories driven by robust consumer demand.
Leading brands and product offerings and vendor consolidation at our largest customers.
Additionally, we benefited in the first quarter from our strategy to invest in increased inventory levels.
Two of share product availability to our customers and consumers.
We continue to see solid performance across most of our channels, including mass club off price and increasingly grocery.
We also benefited from expansion into adjacent categories, where we believe we of our right to win given our infrastructure product design capabilities and customer relationships.
New product launches in the barbecue pet and storage and organization categories contributed to our strong performance and we believe we will drive growth in these and other consumable durable categories moving forward.
We are also continuing to grow our e-commerce revenue.
Which grew approximately 65% in the first quarter non accounted for approximately 20% of total revenue in the quarter up from 16, 2% as compared to the comparable quarter a year ago.
Contributing to our Omnichannel growth has been our ability to execute drop shipments, which grew approximately 38% compared to the prior quarter.
Prior year excuse me.
It is worthwhile to note that while our e-commerce revenues have grown significantly.
We have grown at a faster pace than our brick and mortar channels during the quarter.
We are excited about the opportunities presented by our strategic acquisition of ear and day of development stage online tabletop platform focused on millennials and Gen Z consumers, which enable us to enhance our dinnerware offering for this high value age group.
As mentioned on the last call, we expect the transaction to be accretive by 2022.
We believe that this and other new brand and category offerings in 2021 will enable lifetime to continue to achieve growth levels in excess of our underlying markets within our core business.
Turning to our international business.
We saw a significant year over year improvement in profitability as we continue to reap the benefits of the reorganization.
Of our international Oregon operations.
And market strategy.
Despite store closures throughout Europe, our international business grew revenue 22, 8% in the first quarter.
Importantly, the impact of our transformation strategy for L. P. B Europe can be seen in the year over year improvement in EBITDA of $4 6 million for the quarter.
Contributing to this improvement.
A reduction to the LTV Europe cost structure is evident in the reductions in our U K distribution expense as a percentage of gross shipments from our warehouses to 14, 4% from 16% year over year.
As I mentioned earlier.
We are also starting to see revenues from our kitchen aid kitchen tools and Bakeware International rollout.
And are making meaningful progress with our whole product level.
We are also pleased with the progress and corresponding potential with brands that we've launched directly to consumers in Asia.
Dampening International revenue growth, we have seen a planned reduction in our overall international ecommerce revenues as we eliminated a meaningful amount of skus, which had a low or negative contribution margin.
The near and long term benefits from this planned reduction can already be seen in the first quarter results with improved margin percentages and margin dollars generated from this channel.
We accept we expect to see further uplift from our international business as the U K in other European markets continue to reopen this year.
Turning to another long term growth initiatives.
We remain confident that our investments in the commercial foodservice business with Mcarthur hospitality will provide significant long term growth opportunities for lifetime.
To this end we have increased our investment in my cost of hospitality in 2021.
And we have continued our sales and ramp up efforts during the pandemic.
Which we believe are gaining meaningful traction with distributors and customers.
In the second quarter, we brought on key talent to bolster our sales capabilities and help us successfully execute on this massive opportunity.
We continue to be optimistic about the potential for our front of the house Foodservice initiative, the complement our leading position in back of the house small wares.
And expect to gain significant share in this category in the COVID-19 recovery and in 2022 and beyond.
I look forward to providing further updates as restaurants hotels and the hospitality industry continued to open up and eventually return to normal operations.
As mentioned on last quarter's call.
We are experiencing headwinds related to shipping challenges due to inbound ocean freight and outbound domestic freight availability.
As a result of these headwinds we experienced slight shipping delays and cancellations.
Thanks in part of the flexibility provided by our balance sheet. We are actively working to mitigate these headwinds by investing in inventory to ensure continued availability of our products.
We are also working on several strategies involving our supply chain, which are designed to mitigate these challenges.
In addition to free of challenges, we are seeing inflation in the various inputs to our cost of goods sold.
Again, we are actively implementing mitigation strategies to offset these inputs, which we believe will continue.
We believe we'll offset these cost increases.
We do anticipate of short term lag impact until the benefits of the strategies are realized.
And therefore anticipate of temporary slight reduction in our gross margin percentage.
These factors were considered as we developed our 2021 financial guidance, which I will discuss in greater detail shortly.
Looking ahead 2021 will be a year of growth investment.
As we strengthen our focus on strategic initiatives designed to provide incremental growth to our base of business.
This includes expanding in foodservice and in categories adjacent to our core business, where we have a right to win.
Supporting high growth and high margin potential brands like the year on day.
And continuing to enhance our digital capabilities and assets.
We will continue to leverage the strength of our balance sheet.
As we capitalize on these opportunities to drive long term growth and profitability.
While 2021, we'll see a significant increase in investments to support these growth initiatives.
We still expect to be able to achieve meaningful growth in our top and bottom line.
All of these factors should lead to a very strong 2021.
That brings me to our financial guidance, which we issued this morning.
We've built this forecast carefully after evaluating all of our key categories brands and products.
And we're confident that we are well positioned to meet the cell.
Factors that we considered in setting our guidance among others included COVID-19 impact.
Inflationary challenges.
Labor cost positive secular trends.
And positive set of tracks excuse me.
COVID-19 factors include timing of irregularities caused by previous discussed.
COVID-19 impacts on supply chain in India and.
And China.
As well as challenges in international markets as a result of continued Lockdowns in Canada and Europe.
Despite these factors we will continue building on an incredibly strong momentum.
As we grow across our categories and continue to gain market share as well as capitalize on the market share gains we have made over the past 15 months.
Our guidance also considers the near term inflationary challenges I mentioned earlier, which impacted cost of goods sold and freight costs.
Finally, we have also considered a noticeable increase in domestic labor costs consistent with what we have been experiencing for the past six months.
As provided in more detail in our press release.
Outlook for 2021 is to achieve net sales of between $847 million.
$856 million.
Diluted income per share of $1 24 to $1 33.
And adjusted EBITDA of 82, 5% to $85 5 million.
As you can see.
Even with our planned investments and certain macroeconomic headwinds, we expect to be able to grow double digits in 2021.
Building upon our 21% adjusted EBITDA growth in 2020.
Based upon the company's accelerated growth and success in achieving its previously disclosed long term financial objectives.
We will be revising those objectives upward.
Driving our continued growth is the strong market share position that we have achieved supplemented by plus one growth opportunities that we continue to investing.
Further we expect to benefit from increases in homebuilding and homeownership supplemented by an increase in home entertainment driven by vaccinations in our returns of social gatherings, which are expected to grow home entertaining in the U S.
With that I'll now turn the call over the lab.
Thanks, Rob.
As we reported this morning net income for the first quarter of 2021 was $3 $1 million or 14th.
Per diluted share versus the net loss of $28 2 million or $1.36 per diluted share in the first quarter of 2020. Adjusted net income was $2 8 million for the first for the 2021 first quarter for 13 cents per diluted share as compared to adjusted net loss of $5 7 million.
Or 27 cents per diluted share in 2020.
The table, which reconciles this non-GAAP measure to reported results was included in this morning's release and income from operations was $9 2 million for the quarter in 2021 as compared to a loss from operations of $25 2 million in the 2020 period.
The 2020 period would have been $2 $3 million loss, excluding a $20 1 billion dollar charge for goodwill impairment and a $2 8 million call of charge for bad debt reserves.
Just the EBITDA non-GAAP measure that is reconciled to our GAAP results from the release was $90 $9 million for the trailing 12 months ended March 31 2021.
This represents a $13 $6 million increase over the $77 $3 million for the year ended December 31 2020.
Net sales in the 2021 quarter were $195 7 million compared to $145 1 million for the 2020 quarter.
The U S segment sales were up 47 million to $176 2 million.
The increase came from category growth and increased market share in the kitchenware products category led by the kitchen tools and gadgets cutlery bakeware products kind of.
The growth reflects the continuation of consumers preparing more meals at home in addition to market share gains and new product introductions and market share gains reflect the appeal of our products and brands and our ability to keep retailers in stock.
In addition to the ability to offer of drop ship capability to Omnichannel retailers tableware increased across all product lines, most notably for flatware and higher e-commerce sales for dinnerware.
Home solutions home decor, and measurement products growth was offset by decline in hydration products, which that anniversary of <unk> 2020 Warehouse club program.
International segment sales were up $3 6 million to $19 5 million on a reported basis.
$2 7 million in constant U S dollars. The segments increase came from the continued recovery of sales to brick and mortar retailers to pre pandemic levels and an increase in ecommerce sales.
Gross margin for the 2021 quarter was 33, 7% and for the 2020 quarter $36 five on a reported basis. Despite the percent decline gross margin dollars increased by 25 per cent for.
For the U S segment gross margin was 33, 9% in the 'twenty, one quarter versus 38, 2% last year the.
The gross margin decrease was primarily due to higher inbound freight costs, reflecting a worldwide shortage of shipping containers and other supply chain constraints. The higher freight costs will persist and we will also experienced increases in product cost due to commodity inflation incurred by our suppliers, we anticipate mid.
The gating these higher costs through selling price increases and negotiation of opportunities with our suppliers and ocean freight carriers.
Gross margin for <unk> was also affected by product mix and a benefit in the 2020 period of the duty exclusion refund on certain products. In addition in order to free up warehouse capacity to accommodate strong product demand in the 2021 quarter. We recorded a charge of approximately $1 million to work quickly move slower move.
The inventory.
For International gross margin was 31, 8% into 2021 quarter compared to 22, 9% in 2020.
The improvement is attributable to the 2020 period being negatively impacted by higher sales allowances and reserves for slow moving inventory.
Distribution expense for 2021 quarter was nine 5% of sales versus 11, 4% in 2020.
For the U S segment distribution expenses as a percentage of sales shipped from its warehouses was eight 9% and nine 8% for the 2021 and 2020 quarters, respectively. The <unk>.
Improvement was the result of the leverage benefit of fixed cost on higher sales volumes and continued efficiency improvements.
This was partially offset by an increase in hourly labor rates and an increase in the more intensive late of more labor intensive piece pick volume to address major customers of business needs and some continuing COVID-19 expenses, which were onetime in nature.
For the international segment distribution expenses as a percentage of sales shipped from its warehouses, excluding moving and relocation costs for the UK operations from 2020.
Were 14, 4% and 16% for the 'twenty, one 'twenty quarters, respectively. The.
The improvement was primarily attributable to an improvement in the labor efficiencies as the prior period experienced the efficiencies associated with the setting up of its new U K warehouse.
Selling general and administrative expenses were $38 1 million for the 'twenty, one quarter versus $41 5 million in 2020.
U S segment expenses were $27 4 million in 'twenty, one quarter versus <unk> 34 in the 2020 quarter.
As a percentage of net net sales SG&A expenses declined to 15, 6% from 23, 5% last year.
The expense decrease was primarily due to lower estimates for bad debt expense and lower selling and facility expenses, which was partially offset by an increase in incentive compensation.
In addition, we are incurring growth investments designed to grow the front of the house hospitality category and other business categories and are also beginning of a plan incubation investments in the year and day business.
SG&A expenses for the international segment were $5 million in the 2021 quarter compared to $6 5 million for the 2020 per quarter.
The decline reflects lower estimates for bad debt expense, lower selling and lower employee expenses.
Okay.
Unallocated corporate expenses.
So at the moment.
And the 21.
The quarter versus six.
The last year.
The increase was driven by the.
Since of the compensation.
Looking at interest expenses.
The $1 billion in the 2021 quarter versus the $4 7 billion of 2020.
Debt outstanding and the.
The company.
Got it.
The interest rate swaps the current period losses.
Okay.
Okay.
Versus the prior year period.
A couple of losses.
The $2 million.
Right.
Results of significant declines.
That's correct.
Yeah.
The 21 quarter.
Right.
2%.
Hi.
Statutory rate primarily due to state.
Okay.
Losses for which no benefit is right.
Okay.
The income tax rate.
2027, 6%.
The federal statutory rate primarily.
The total.
A portion of it.
Sure.
Okay.
Liquidity continues to go from there.
Great.
Net debt 221 5 billion.
Net debt EBITDA.
The Asia was two four times and liquidity.
Sure.
Okay.
The bill.
<unk>.
<unk> was 177.
Yes.
Okay.
For.
Yeah.
The 'twenty one as well.
Net sales.
2000.
2020 to a range of the $847 million to $856 million.
The one.
The timberland.
Two of 11, 3%.
Adjusted net income.
The $9 million in 2020 to a range of.
The five six.
The 6 billion in <unk>.
'twenty one.
Okay.
Both of them.
I've been to 16, 9%.
Adjusted net income from <unk>.
$2 million in 2024 range for 'twenty.
<unk> $27 million to $29 million in 2012.
The decrease.
So I went to 40.
Okay.
From 77 million the 'twenty 'twenty to a range of $82 five.
Five five.
91, an increase of.
$6 76 per cent.
Guidance is based off of forecasts of talent.
It's early.
The increase of 30 and net income.
There were calculated based on the.
The income tax rate.
This concludes our prepared comments operator, please open the line for questions.
I would like to the mine.
Great question.
Okay.
Okay.
Yeah.
Okay.
Yeah.
No.
Good morning.
The only.
Oh, sorry.
'twenty one.
So as we look at the guidance for for this year.
Obviously coming off of a sort of 5% increases.
How should we think of it.
The expectation for revenue.
The balance of the Euro zone.
I know you do have some.
More typical.
Harrisons.
The back half of what you just described.
So maybe help us understand how we should think about the.
The seasonality.
The quarterly distribution of of the revenue gains.
Most of the euro.
Yes.
Thank you for you.
For March.
Okay.
In terms of of your question.
The.
The first half of it.
Definitely we'll have strong our growth percentages, but we're seeing continued strong demand and order flow for our products.
On the demand and revenue side unknowns, but we are there are now restrictions.
Retail is being.
Being opened up in Europe, which should have a positive impact on our European based business.
So that that should be it should be positive.
So on the demand side definitely.
The easier comps in the stronger growth percentages.
Would be in the first half of the year, but.
I think we will see growth throughout the year.
Okay, great. Thanks for that so.
You mentioned some of the growth in revenue came from new products in the first quarter, just wondering what was that.
Is there any way you guys can quantify how much of the of the.
The first quarter revenue came from from new products.
We don't have that statistic, because we don't look track in that manner.
For example.
And what we're talking about is plus one opportunities right. So we're always introducing new products, but sometimes it can be of new product. That's replacing are cannibalizing an old product, but I had mentioned and kitchen aid. We've now are launching the cutlery opportunity.
Yes, so we never sold kitchen cutlery that'll ramp up throughout the year. We have we just started selling out this year and we're expanding out in different.
Doors and different retailers and different avenues and channels throughout the year, So that will continue to gain momentum.
Similarly in international where we never sold that brand and we're starting to roll that out we will see increasing momentum throughout the throughout the year.
Year end day, which we've talked about.
We havent turned that on yet.
So at this point share expense and no revenues.
We will turn that on.
No later than Q3.
And start seeing some some revenues from that new opportunity.
There is a will also start seeing a hopefully meaningful growth from the launch of a new brands.
Walmart.
Where we'll start seeing those numbers in the second quarter.
Okay, all right yeah. Thanks, Thanks for the color and then.
The last question for me.
So as far as the increase in investments that you're planning for the year.
How should we think about the timing of of the increased spending as we.
Refine our models for the rest of the year. If you could just kind of give us a sense as to the timing of seeds.
The expense increases.
Yes, there's three buckets, one is cash capex not very much.
So there is a M.
Sort of Greenfield opportunity that we're investing in and of that is requiring some capital because it's software oriented.
Too soon to talk about it but there will be some capital in there, but nothing meaningful.
So the two buckets that youll see are in G&A.
And in margin.
Depending upon how we spend the money.
Some of it we've already started to experience in Q1 of matter of fact, we yes for the investment we've talked about.
Seeing the progress we're making in 2020, we started ramping up those opportunities. Some of that is just filling in new positions on for digital of expanding our digital business.
We've invested in that starting in Q4.
So it will continue to ramp.
Through the first two quarters and kind of be steady state.
From that basis, but we're as you see we're more than funding these investment opportunities.
And continuing to grow the business at the same time.
Got it okay. So so that will be for both G&A and margin as far as the true <unk> impact.
Yes.
Okay, all right well, thank you and best of luck, but we're not going to stop spending in Q4.
Right Okay.
Alright, well. Thank you again, the best of luck.
Thank you Ed.
Your next question comes from the lineup.
The polls.
Hi, good morning.
I was just wondering a little bit more about your gross margin because it was down a fair amount in the quarter. Although the international side was quite quite strong. So I guess you mentioned a couple of things on the U S side benefit of the prior year of duty refund are there any other quarters in 'twenty two.
Where we're going to have that type of hard comparison, where you got duty refunds last year can you remind us.
No that's the the first quarter stood out yes.
Yes, that's it.
Yeah.
We're always going after opportunities right.
Unfortunately.
You know the tariff and duty.
Regime.
It's very convoluted and theres been so many.
Put on.
And take offs.
So that's and that created the opportunity for us to get a refund as there was.
Some duties that were put on and they were taken off and put back on and take it off but anyway that gave us the opportunity in the first quarter. There is still a lot of cloudiness in terms of the new administration, but theres not as much fluctuation.
Which created the the sort of.
Year over year fluctuation in the first quarter the.
Other margin inputs as we talked about we took a million dollar charge offs the business is going really well.
And we made the opportunity to monetize stuff, we could've sold but at the lower margin and replace that with higher margins as opposed to having to at peak times of worry about taking third party warehouse space, because we were freeing our pallet positions.
We'll monetize that you know just we wrote down the margin from it. So we can monetize that and again replace business. We would've sold at low margin to a inventory that will get full margin of error and that impacted the first quarter and in the first quarter. We also had we talked about look we've been growing in.
You see the 65 growth per cent growth.
E Commerce, but we also had a lot of growth in the brick and mortar including in the club channel.
Much more heavily weighted quarter over quarter, which had an impact.
Okay and then.
In terms of of the guidance for 2021, I'm just doing my math here real quick I mean at the high end of the range, you've got an 11% sales growth rate.
And for operating profit at the high end of the range adjusted operating profit you're guiding to seven.
17%.
So that does imply some margin expansion and yet I get the feeling that.
Well, you've got investment that you've talked about so that may affect your SG&A and then there's these cost pressures and gross margin. So I'm just kind of trying to figure out like where is the margin expansion coming from is the gross margin actually going to be up year over year. In this first part of it was just kind of an anomaly.
So I think so.
What you just quoted would be operating margin in the gross margin, though correct.
So I'll address that and I can talk further.
If you'd like.
But.
We did there are a lot of headwinds something we'd been experienced for a while there are a lot of headwinds of some people arent offering guidance of that we felt confident enough to do so.
And.
The we've factored in.
These different headwinds and the multiple buckets of them, but we also continue to take better utilization of the company's infrastructure and a lot of these changes continue to roll through the income statement throughout the year, which increases our operating margin.
So if you look at.
Yeah.
The growth we've achieved and continue to achieve we can more than fund that with all of the.
Growth that we achieved in 2001 and continue with <unk> now.
The increase our operating margin at the same time.
Did I articulate that okay.
Yeah, I mean, I think what Youre trying to say is there's there's probably there youre going to get underlying leverage of the cost structure. Because you are projecting pretty good revenue growth.
So I guess, that's one of the factors here, but I.
I mean again I'm just a little you know concern because of the gross margin was down so much in the first quarter and then there's all of these inflationary headwinds I'm just kind of.
I'm trying to think about if the gross margin can expand for the year do you have a sense for that.
Yeah well.
There will be various impacts throughout the year of something we've already been experiencing.
In terms of the gross margin and we do anticipate.
And actually are already.
Working through having to get price increases is one of our mitigating actions.
But we've also been working the supply chain, which reduces our cost of goods sold.
On an absolute basis and of course mitigating that is of the inputs are also up right. So there's a lot of moving parts.
One thing the impacts margins, we've moved out of geography, you know you'll see some of that in this year. So if you look, particularly in our metals of our flatware of business.
Where we're shipping from in the second half of the year will be the same as some tariffs goods that were shipping from in the first half of the year. So the.
The elimination of paying the tariffs has a positive impact on margin so.
What I'm basically saying is it's a very complicated environment, we sit in today with tremendous amounts of inputs in all directions, which we factored in to be able to give you guidance for the year.
Okay.
And with regard to this new line at Walmart that I think you said would be generating some revenue I think you said the second quarter.
Have you announced what the brand is in I was under the impression it might be of partnership where it might be of license type brand can you give us more specifics on exactly what it is.
Yes. So it is the license plan next time, we'll give you more specifics theirs.
We're planning to do that for me on this call.
But we were just agreement why realized that the last stat gains that we had.
An obligation with a license for.
And we didn't get it done in time, because we realize it too late so we'll talk about it next time, but it is on schedule and it is the celebrity brands launch.
Exclusively at Walmart.
Okay.
Great and then kicked.
Just a little bit of a few bought here with the online tabletop sales I'm just kind of interested in what your plan is for that I mean is is your plan going to be to kind of.
Sally your other brands through that website or like what what is your intent for that for that business.
Yeah, that's a good question.
So if you look at our particularly our dinnerware offering.
We view that we have viewed that we're on the underpenetrated.
And of traded in the younger age groups.
Year to day, that's our sweet spot and have made tremendous flash before they ran out of money because of its venture back.
And we see that is of great.
Complementary product fit with everything we're doing so we're going to keep it as its own.
This unit selling year, and a day branded product direct to the consumer online.
Okay. So you'll just keep it separate kind of running on its own for them for awhile.
It's being run by Catherine urea Who's the founder and she is the.
The president of the business unit for US now out of out of San Francisco as it was before we bought it now we're integrating it and operationally so we get a lot of benefits from that into the greater operational but from a sales and marketing product prospect of digital perspective, it'll be it's own native brands.
Which we think has a lot of potential.
Is are the annual sales like is it over 10 million are under $10 million.
No I Didnt incubated it's on.
The test and you know it again.
Again, it would round out of funding. So we didn't shut down so we will relaunch it.
So it's sales today are zero.
It has a loyal customer base that we should ramp up quickly once we turn it back.
Okay, and then finally I'm just wondering about.
Uh huh.
Your.
For activity in M&A, you know of some companies have been saying that this back activity has made it hard to do things are you still able to look at things our prices reasonable or kind of what's your activity there.
Yeah.
We're very active and we're looking at a lot.
And <unk>.
And we have a lot of availability on our balance sheet.
Particularly for buying businesses that are positively generating cash flow.
The we've been very disciplined and there were a couple of opportunities that we looked at spend time and money on it.
But.
We see better internal opportunities and getting back to your the question yes.
Valuations have been extraordinary.
So were seeing companies that should be trading or I say true historically of traded at an eight times multiple that of trading at a 12 times multiple.
So therefore, we have not pursued anything.
We've seen that as of the meriting that valuation level, we continue to look and we feel confident we will execute but we're in no rush of that you've seen the numbers were doing quite well and our internal opportunities are quite attractive.
Great. Finally, I mean, just with a little bit of extra spending do you have of Capex guidance number for the year for 2020 one.
Approximately $6 million.
Okay.
Okay. That's it for me Oh, Yeah go ahead.
And then just further to what Larry said and you've seen US now for a little bit is even while we're ramping up for certain levels of them also ramping up of potential order more automation in our anarchy says right in view of of.
Where labor rates are.
Just to be efficient, but it's such an asset light model of that even as we ramp that up.
Still not spending that much at all cash capital.
Right.
Okay. Thank you good luck with everything from them.
At this time there are no further questions.
Great.
In that case, we appreciate everyone's interest in lifetime brands and your attendance on this call and we look forward to continuing to report to you in the future.
Today's conference you may now disconnect.
Yes.